By Sara Stephens, Sustainable Economies Law Center (SELC) Housing and Cooperatives Attorney

We want to create a worker cooperative…what legal entity should we form?

This is probably the most common question I hear at our Resilient Communities Legal Cafes. Lots of entrepreneurs come to us wanting to form a worker-owned business, but they are unsure what legal structure will work best for them. Are they required to form as a cooperative corporation? What if they’re not ready to incorporate yet? Can they form as an LLC or some other entity and still be a cooperative? What are the benefits and drawbacks of the entity options?

Host your own "Learning to Think Outside the Boss" workshop!

Thank you for your interest in hosting"Learning to Think Outside the Boss: An Introductory Workshop on the Legal Nuts and Bolts of Starting a Worker Cooperative!" Below, find resources we've created to teach about how the law works in, against, and for worker cooperatives. This is a shorter, participatory, discussion-orientated version of our half day "Think Outside the Boss" workshop.

View and download the Facilitator Guide here

View and download the Participant Guide here

View and download the Powerpoint Slides here

NOTE: These materials are updated at irregular intervals and might change from time to time. Updates are based on feedback from participants and those who facilitate the "Learning to Think Outside the Boss" workshop. Please send questions, feedback, or comments about this guide to [email protected].

What is it?

This workshop provides an introduction to the practical steps individuals and groups need to take to establish, build, and successfully manage a cooperative enterprise. This introductory workshop attempts to bring forward basic legal and structural questions such as what is a cooperative, what is a legal entity, what rules govern fundraising and financing for cooperatives, and more. This workshop provides an overview of the content contained in Sustainable Economies Law Center's Think Outside the Boss: How to Create a Worker-Owned Business manual.

Why Do it?

This workshop is meant to provide an introduction for those looking to support cooperative development and for entrepreneurs and activists seeking to build a worker cooperative. By the end of the workshop, participants should be able to

• have a basic understanding of the cooperative form from a functional and principled perspective,
• understand the Cooperative Principles in practice,
• distinguish cooperatives from other business forms,
• distinguish between the different kinds of cooperatives,
• understand basic questions that should be asked when founding a worker cooperative,
• and think about cooperatives as they relate to the needs in their lives.

Method

Facilitators should use a combination of lecture (minimal), experiential learning, and popular education techniques to engage the group actively in the process of learning about worker cooperatives and cooperative business development.

Background

Beginning in 2013, SELC and the East Bay Community Law Center have been hosting half day workshops called "Think Outside the Boss" three times per year in the San Francisco Bay Area. These Think Outside the Boss workshops provide community members an introduction into the nuts and bolts of starting and running a cooperatively owned business. We go over legal issues in an accessible way to help you understand the relationships between cooperatives, employment, and community wealth-building. Attorneys, law students, and experienced cooperative professionals give short presentations on legal issues, governance structures, financing, and more. We also typically host breakout sessions on specialized topics with attorneys, cooperative accountants, business planning specialists, and discussions led by cooperative worker-members. To find the next Think Outside the Boss workshop, please visit theselc.org/events. 

This facilitator’s guide was originally prepared for the 2014 JACKSON RISING: NEW ECONOMIES CONFERENCE in Jackson, Mississippi. Their clarion call to build a broad based solidarity economy in the southern US led us to deepen our intention of making legal education accessible to those building economic democracy all around the country. With feedback from the worker cooperative community, allies, and others who use our resources, we have attempted to refine this facilitator’s guide in order to increase its usefulness to the movement. We hope this guide can introduce cooperative entrepreneurs, practitioners, and cooperative developers to the basic legal concepts when starting and operating a worker-owned cooperative.

DISCLAIMER

THIS GUIDE WAS PREPARED FOR A 2016 WORKSHOP ON STARTING A WORKER-OWNED BUSINESS. THE CONTENTS OF THIS GUIDE AND ACCOMPANYING THINK OUTSIDE THE BOSS MANUAL SHOULD NOT BE RELIED ON AS LEGAL ADVICE.

ALSO, SOME OF THIS INFORMATION COULD BECOME OUTDATED, AND LAWS VARY FROM PLACE-TO-PLACE. FURTHERMORE, ALTHOUGH WE TRIED TO COLLECT ACCURATE INFORMATION AND GIVE THE LAWS OUR BEST INTERPRETATION, SOME INFORMATION IN THIS GUIDE AND ACCOMPANYING MANUAL COULD EVEN TURN OUT TO BE INCORRECT OR SUBJECT TO OTHER INTERPRETATIONS BY COURTS OR REGULATORS! WE SURE HOPE THAT’S NOT THE CASE, BUT, WHAT CAN WE SAY? LAW IS COMPLICATED STUFF! THAT'S WHY WE STRONGLY RECOMMEND THAT YOU CONSULT WITH AN ATTORNEY BEFORE USING THIS INFORMATION TO FORM OR OPERATE A COOPERATIVE.

Araz Hachadourian of Yes! Magazine covers the passing of a co-op resolution in Berkeley, CA which requires the city to create an ordinance that supports worker owned cooperatives. Sustainable Economies Law Center (SELC) Policy Director, Yassi Eskandari-Qajar, is quoted extensively about how worker cooperatives benefit cities and communities.

By Chris Tittle, Sustainable Economies Law Center (SELC) Director of Organizational Resilience

Last August, 200 people from across Oakland, California came together to envision and design a development plan for a small parcel of public land. For months leading up to that day, community members and neighborhood coalitions had been organizing against a controversial - and possibly illegal - plan to develop a luxury high-rise apartment complex on land owned by the City of Oakland, in a neighborhood where 75% of residents are low or very-low income and 75% are renters. Having succeeded in pressuring the City to back out of the initially proposed deal with UrbanCore Development through creative direct action and sophisticated community organizing, organizers with the E12th St Coalition wanted to create a visionary community-driven alternative - and the E12th WishList People’s Planning Forum was convened. On a sunny Sunday afternoon near Oakland’s Lake Merritt, hundreds of people shared their visions for what could be done with this public land - and not a single person envisioned a market-rate housing complex on that site.

FOR IMMEDIATE RELEASE

Berkeley Passes Resolution Supporting

Worker Cooperatives

BERKELEY, CA (February 9, 2016) — On Tuesday, the City of Berkeley made a bold proclamation in support of democratic and equitable workplaces, passing City Councilmember Jesse Arreguín’s “Resolution Supporting the Development and Growth of Worker Cooperatives.”

What do you get when you cross a worker cooperative with a 501(c)(3) nonprofit?
A worker self-directed nonprofit!

As the movement for economic and workplace democracy continues to grow, we think it is vitally important that nonprofit organizations also internalize and practice workplace democracy. We've put a fair bit of thought into our own organizational structure and culture, and now we are working to provide resources, advice, research, and a peer network to support worker self-direction in nonprofits everywhere. 

In mid-2023, we wrapped up the first iteration of Collaborate to Co-Liberate, a 12-month peer learning journey that brought together 200 participants from nearly 100 organizations. The program explored the stickiest questions facing movement groups striving to build equitable, democratic, and life-giving organizations, with modules led by leading practitioners, including adrienne maree brown, Gopal Dayaneni, and more. We're organizing our second cohort of Collaborate to Co-Liberate for 2025; check out our calendar here!

Training

So what's a worker self-directed nonprofit? We are defining this as a nonprofit organization in which all workers have the power to influence the programs in which they work, the conditions of their workplace, their own career paths, and the direction of the organization as a whole. Our own experience practicing worker self-direction and an emerging body of research both show that distributing leadership throughout an organization can create organizations that are more effective at advancing their mission, more adaptable and responsive to complex systems, more accountable to their communities, and more equitable and fun places to work! Read more here.

There are lots of reasons to be critical of the nonprofit industry, but by their very nature, nonprofit organizations provide a structure that resists the strong pull toward private wealth accumulation. We should not abandon nonprofits. We should just democratize them!

The best way to get tailored support for your organization is through our Resilient Communities Legal Cafe. Periodically, we also offer workshops and trainings on how to implement worker self-direction - check our event calendar for upcoming events.

We will continue growing the Network in 2025 while expanding our online community of practice, hosting a second cohort of Collaborate to Co-Liberate, and developing new videos in our popular worker self-directed nonprofit (WSDN) TV series. 

Get Involved!

Networking: Join our Google Group and our Facebook Group to participate in an informal peer network for active and aspiring worker self-directed nonprofit practitioners. Connect with others, ask questions, and share resources about workplace democracy in nonprofit organizations.

For other questions about our work, contact Sue [at] theselc.org.

A Discussion with Jessica Gordon Nembhard

The US has the world's largest prison population at over 2,217,000 inmates. What would happen, though, if we began looking at worker cooperatives not only as an economic development tool but also as a tool for those incarcerated by the prison industrial complex? What transformational effects could this lead to? Are there examples of cooperatives made primarily of incarcerated or formerly incarcerated individuals and what can we learn from them? How can worker coops be an effective tool for those who were formerly incarcerated and how would it support re-entry? 

For those seeking new, real solutions for our incarcerated or formerly incarcerated brothers and sisters, SELC hosted a discussion with Jessica Gordon Nembhard, professor at John Jay College, CUNY and author of Collective Courage: A History of African American Cooperative Economic Thought and Practice.

Listen below!

Building an economy that is truly just and resilient means putting worker ownership at the center of economic development policies. Local governments can play a critical role in cultivating a friendly policy environment for worker cooperative development. The question for cooperative advocates is, where do we start? This page provides some helpful resources for jump starting local campaigns to promote and remove barriers to worker-owned businesses.

The free advocacy materials available throughout this page are intended to help you start your own campaign! All of the content created and published by the Law Center is licensed under the Creative Commons Attribution-ShareAlike 4.0 International (CC BY-SA 4.0).

In 2015, the Sustainable Economies Law Center started building a sample "City Ordinance for the Promotion of Worker Cooperatives" with the support and collaboration of cooperative allies across the country. We used Oakland, California as a case city, and tailored the ordinance to fit Oakland's municipal code. By going through this exercise, we had created an ordinance that would lead to our local campaign, and created a model for others to use in other cities. To discuss the ordinance in more detail, please contact Sara Stephens.  

>> Click here for the sample city ordinance.

>> Click here for the sample city ordinance summary.

In collaboration with our partners, we have compiled an informational packet aimed at educating local legislators about worker cooperatives and their local economic development benefits. We offer this here for cooperative advocates who aim to introduce policies to promote cooperative economies. 

Packet includes: What is worker cooperative, economic and social benefits, how local governments can support business conversions to worker ownership, and more! 

      >> Click here for the informational packet. 

Berkeley, CA

Click here for updates and milestones from our Berkeley campaign. 

Background:

Following on the heels of the Oakland Resolution Supporting Worker Cooperative Development, the Sustainable Economies Law Center and our allies worked with then Berkeley City Council member (now Mayor) Jesse Arreguín to develop a Berkeley resolution to promote worker cooperatives.

On February 9, 2016, Berkeley City Council unanimously voted in favor of the resolution. Not merely a symbolic gesture, Berkeley's resolution directs City staff to develop a comprehensive policy package that supports and incentivizes the growth of local worker-owned cooperatives. The policy package would, at minimum, add a worker cooperative preference to the existing Buy Local contracting preference, create business tax and land use incentives for worker cooperatives, and develop cooperative-specific educational materials to supplement the City’s business support services.

Evolution:

Visit our press release page to read about major campaign milestones from 2016 to present. Highlights include a $100,000 budget appropriation for worker cooperative technical assistance and innovative changes to the City's revolving loan fund to expand business lending to worker cooperatives. 

>> Click here for the Berkeley City Ordinance. Check out our two page summary of the Berkeley ordinance here. 

>> Click here for the Berkeley City Council resolution and informational packet we provided to Berkeley City Council.

Oakland, CA

The Sustainable Economies Law Center worked with Oakland City council members and a coalition of supporters to introduce a Resolution Supporting the Development of Worker Cooperatives on September 8th, 2015. This resolution was an important step toward adopting a more substantial policy in that it publicly recognized the positive impact of the local worker cooperative ecosystem, and built momentum for the ordinance, which will be introduced in 2017.  

>> Click here for the press release for the resolution's passage.

>> Click here for the text of the Oakland City Council Resolution.

>> Click here to watch the resolution hearing (fast forward to minute 52)!

Worker cooperative legislation is spreading like wildfire as cities and states recognize the profound positive role worker cooperatives play on the individual and community levels.

For information on policy efforts across the country, we recommend visitng the Democracy at Work Institute's Becoming Employee Owned, Community Economic Development, and Tools for Communities.

Do you want to stay up to date with our city policy work promoting resilient economies and worker cooperatives? Do you want to join the movement of worker coop policy activists pushing for an economy that is truly just? Sign up below to hear important updates and calls to action!

 By: Malcolm Burnley
 (Originally published September 22, 2015)

 "[O]n September 8th, the City Council made good with a ceremonious resolution 'supporting the development of worker cooperatives in Oakland.'

Among other items, the move recognized that these sorts of businesses — estimated to number between 300 and 400 nationally — offer wages and benefits above industry averages. The resolution, too, was a tacit acknowledgement from Council that the city will look for ways to support co-ops down the road . . .

What that municipal support might look like is to be determined. But in a draft ordinance authored by the Sustainable Economies Law Center (SELC), one of the organizing forces behind the referendum, the wish list for worker co-ops includes: getting the city to offer low-interest loans for converting traditional businesses into worker co-ops; preferential status to co-ops in the city contract procurement process; and waiving taxes and permit fees in the initial year of existence."

Read the full article on Next City